PHOENIX—LQ Management LLC’s decision to put 46 corporate-owned assets on the trading block isn’t a precursor to the company being sold by parent Blackstone Group LP, nor is it an indicator that La Quinta plans to enter the so-called asset-light model that many other global hotel companies have adopted during the past decade. The potential sale of the assets is simply something the Irving, Texas-based company wants to do to keep its portfolio relevant, according to Wayne Goldberg, president and CEO.
“This is not a fire sale, it’s not something we have to do,” Goldberg said. “It’s something we’ve wanted to do for a long time but couldn’t because of our debt structure. We’ve restructured that debt to allow us to pull the trigger on selling these assets that no longer meet our ownership criteria.”
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Wayne Goldberg LQ Management LLC |
The intent to sell the assets was announced Thursday. While declining to specify which assets would go on the block, Goldberg confirmed 34 are exterior-corridor La Quinta Inn properties. The other 12 are non-La Quinta branded assets the company has collected over the years. He declined to reveal the sales price for the assets, but said collectively they are valued at “a couple of hundred million dollars.”
There is no buyer yet for the properties, but Goldberg said he’s confident the portfolio will sell quickly.
“We’re working with several companies that are looking, kicking the tires,” Goldberg said. “I fully expect to see offers relatively soon on some, if not all, of them.”
He added other brands have shown interest in the assets, and that once they are sold, they will no longer fly the La Quinta flag regardless of acquirer.
The executive said the company would prefer to sell the assets in one transaction but is open to multiple deals if it makes sense.
“It has to make economic sense, it has to be accretive,” Goldberg said. “All of the proceeds (from the sell off) will be used to de-lever the company.”
The potential sale in no way indicates the company will get out of the real-estate ownership business, Goldberg said.
“It’s very in line with our strategic direction, which is improving our product,” he said, adding that once the assets are sold the average age of the remaining 777 properties in the La Quinta system would be less than 10 years old.
Goldberg said 48% of the property’s roster, including the 46 assets on the block, is corporate-owned. The other 52% is franchised.
Company executives discussed other options for the properties before deciding to sell. Goldberg said one plan that briefly was considered was to convert the properties to the Wellesley Inn or Woodfield Suites brands—both of which La Quinta controls.
“What I know for sure is if you take a La Quinta flag off the building, they’re typically impacted more than you would expect,” he said. “We decided to remove the risk component and divest the assets entirely so we can focus on having a strong, single, stand-alone brand.”